2015 (4) TMI 311 - AT - Central Excise

Simultaneous availment of modvat credit as well as claiming depreciation under the Income Tax Act - lower appellate authority has remanded this aspect to the adjudicating authority for de novo adjudication - Held that - respondents have not produced any new argument before the Commissioner (Appeals). On perusal of the adjudication order at para 15.4. the adjudicating authority has clearly brought out the facts of filing revised returns for the year 2001-02, 2001-02, 2002-03 & 2003-04. It was clearly brought out that respondent filed declaration under Rule 4 (4) of CCR that they have not claimed any depreciation wherein it has been clearly brought out that respondents have not claimed depreciation in their IT return for the year 2001-02 on that part of the value representing duty on the capital goods. These facts are clearly discussed by the adjudicating authority in his order. Therefore, it is evident that appellate authority remanded the case to the original authority only on the ground that respondents have filed revised returns without any discussion. Hon'ble Karnataka High Court in the case of Suprajit Engineering Ltd. (2010 (3) TMI 414 - KARNATAKA HIGH COURT) clearly held that once the assessed claimed depreciation under Income Tax Act, he is not eligible for cenvat credit even if they have filed revised returns. - Commissioner(Appeals) order to the extent of remanding to adjudicating authority on the issue of simultaneous availment of cenvat credit as well as claim of depreciation relating to the demand of ₹ 14,84,845/- is required to be set aside and the OIO is restored. - Decided in favour of Revenue.

Summary

Issues: Appeal against Order-in-Appeal No.18/2007 passed by Commissioner of Central Excise (Appeals), Chennai.

Issue 1: Appeal against the Order-in-Appeal

The Revenue filed an appeal against the Order-in-Appeal No.18/2007 passed by the Commissioner of Central Excise (Appeals), Chennai. Despite multiple adjournments due to the non-appearance of the respondent, the appeal was taken up for hearing and decision on merits. The case involved the confirmation of a demand of Rs. 16,82,086 as ineligible cenvat credit with interest and penalties under the Cenvat Credit Rules, 2002 and the Central Excise Act. The lower appellate authority partly upheld the order, reducing the cenvat credit availed on capital goods and imposing penalties related to simultaneous availment of cenvat credit and depreciation from Income Tax. The Revenue appealed against the remanded portion of the order concerning simultaneous availment of cenvat credit and depreciation.

Issue 2: Simultaneous Availment of Modvat Credit and Depreciation

The main issue in this appeal was the simultaneous availment of modvat credit and claiming depreciation under the Income Tax Act. The Revenue contended that there was no need for remand solely based on the respondent filing revised IT returns. The adjudicating authority had already highlighted in detail the facts regarding the filing of revised returns and the claim of depreciation. The Hon'ble Karnataka High Court's decision in a similar case emphasized that once an assessee claimed depreciation under the Income Tax Act, they were not eligible for cenvat credit even if revised returns were filed. The Tribunal also supported this view in a separate case. Consequently, the Commissioner (Appeals) order remanding the case on the issue of simultaneous availment of cenvat credit and depreciation was set aside, and the Original Order-in-Original was restored. The Revenue's appeal was allowed based on these findings.

This comprehensive analysis of the legal judgment highlights the key issues involved, the arguments presented by both parties, and the final decision rendered by the Tribunal.